DY. COMMISSIONER OF INCOME TAX , CIRCLE-3(1), HYDERABAD vs. SAI PAVANI CONSTRUCTIONS INDIA PRIVATE LIMITED, HYDERABAD

The concise ground raised by the Revenue in all its three appeals are that the Ld. CIT (A) has erred in deleting the addition made by the Ld. AO by granting deduction U/s. 80IA of the Act. The assessee has also raised certain grounds in its cross objection and the concise ground is that the assessee supports the order of the Ld. CIT (A).

The brief facts of the case are that the assessee is a Private Limited company engaged in the business of construction filed its return of income for all the three years claiming deduction U/s. 80IA of the Act. Thereafter, during the course of scrutiny assessment proceedings, the Ld. AO observed on perusing the contract agreement that the assessee is merely a work contractor executing Government contracts and receiving contractual payments from Executive Engineers of Guntur, Kadapa and Nellore. The Ld. AO further observed that the assessee cannot be held as a Developer considering the nature and scope of the contractual obligation. On appeal, the Ld. CIT (A) on examining the job performed by the assessee held that, it could be considered that the assessee is a developer and accordingly granted the benefit of deduction U/s. 80IA of the Act.

Ld. AR vehemently argued in support of the order of the Ld. AO.

At the time of hearing before us, neither the assessee nor the Learned Counsel of the assessee appeared to pursue its appeals. Further, on perusing the order of the Ld. AO as well as the Ld. CIT (A) it is not clear as to what is the nature of work executed by the assessee though it appears that it is mere Government contract which are executed against which payments are received on account of running bills and therefore the assessee cannot be construed as a Developer. Further, the assessee had sought adjournment on the earlier occasion and on this date of hearing none appeared. Considering the above facts and circumstances of the case, we are of the considered view that the matter has to be remitted back to the file of the ld. AO in order to pass speaking order describing the nature and scope of contractual work performed by the assessee and thereafter decide the matter in accordance with law and merit. Accordingly, we hereby remit the matter back to the file of Ld. AO for de novo consideration.

Since all the Cross Objections of the assessee are in support of the order of the Ld. CIT (A), they have become infructuous as all the appeals of the Revenue are remitted back to the file of Ld. AO for fresh consideration.

In the result, all the three Revenue’s appeals are allowed for statistical purposes and the Cross Objections of the assessee are dismissed.